The Moderating Effect of Firm Size on the Relationship Between Financial structure, Return on Equity and Stock Prices of Companies Listed in the SETESG Index of Thailand
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Abstract
This research aimed to examine the differences in financial structure (DER) and return on equity (ROE) of companies listed in the SETESG index, categorized by firm size. Furthermore, it investigated the moderating effect of firm size on the relationship between financial structure, ROE, and stock prices of 68 companies listed on the Stock Exchange of Thailand (SET) within the SETESG index, from 2019 to 2023, totaling 340 observations. The study utilized secondary data and employs descriptive statistics and inferential statistics, including independent samples t-tests, correlation analysis, and multiple linear regression analysis, with the fixed effect model being the appropriate model.
The findings revealed that 1) large and small-sized companies in the SETESG index exhibit statistically significant differences in capital structure and ROE. Larger companies had a higher debt-to-equity ratio (DER) but a lower ROE compared to smaller companies; 2) firm size had a significant positive moderating effect on the relationship between DER, ROE, and stock prices; and 3) larger companies in the SETESG group were better able to reflect changes in stock prices from DER and ROE information compared to smaller companies. These results highlighted the importance of firm size in analyzing the relationship between financial factors and stock prices among companies in the SETESG index. The findings were beneficial for investors in making investment decisions, for executives in formulating financial policies, and for academics in advancing financial knowledge related to companies operating sustainably.
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